Paramount Global is on course to scale streaming service Paramount+ internationally, planning market launches in India, the U.K., South Korea, and several European countries.
Speaking on Paramount’s first quarter earnings call, President and CEO Bob Bakish said the first markets will be U.K. and South Korea in June 2022, followed by Italy, Germany, Austria, Switzerland and France in the second half of the year.
A launch in India is coming in 2023, distributed via a joint venture of Viacom18. Bakish noted a new agreement with Bohdi Tree Systems, announced April 27, for a significant third-party capital infusion of nearly $2 billion. With Viacom18 already a player in the market, the deal with Bohdi is “a compelling way to really drive the next level of growth,” he said.
Paramount likes the model where Viacom18 has television networks, combined with an indie film business and streaming assets, with both national and regional reach.
Bakish also pointed out that the company’s core partner in India is conglomerate Reliance, one of the most powerful companies in the market, which also owns telecom market leader Jio.
“Now Viacom18 is set up to be an even bigger player in the market, including in streaming,” Bakish commented, saying it’s a great opportunity for Paramount+. “We’re going to enter in 2023 and we’re going to do so in a very capital efficient, hard bundle way.”
Customer growth in India will be incremental to Paramount’s target of reaching 100 million direct to consumers subscribers by 2024.
The expansions this year and next come after Paramount+ made its way into 25 new markets during 2021 across Latin America, Canada and Australia.
On the ad-supported side, a new version of free ad-supported TV service Pluto TV will be launching in the Nordics this month in a commercial partnership with Nent. Nent will bring local content and ad monetization capabilities, while Paramount brings the streaming platform and global content. A tie up with local broadcasters to distribute Pluto TV is something Paramount plans to pursue in additional markets.
“We believe this will be a compelling growth model and we see more like this to come as we work with local broadcasters in markets where we don’t have a broadcast presence,” Bakish said, adding that global growth is still led by Paramount+.
Paramount DTC subs grow to 62 million
In the first quarter Paramount+ added 6.8 million global streaming subscribers, bringing its total tally to nearly 40 million. Net additions came from both international and domestic markets, with international gains coming from both direct-to-consumer and hard bundle offers.
Total streaming subscribers across platforms grew to 62.4 million, with total content consumption reaching 14 billion hours on owned and operated platforms. Its FAST service Pluto TV gained 3.1 million subscribers, bringing active monthly users to 67.5 million. In the quarter Pluto TV launched over 102 channels internationally to reach more than 1,000.
Other streaming services declined by 500,000 including Showtime, BET+, Noggin and some other smaller international streaming services, which the company attributed to timing of new content. On the call Bakish noted that streaming services other than Paramount+ together added 5 million subscribers in 2021, boosting the overall streaming business. He also cited plans to integrate Showtime as an add-on option within Paramount+ starting this summer.
“We view a combination of a broad service, in this case Paramount+, plus specific services which target specific consumer segments, things like Noggin, things like Showtime, as additive to going after the largest TAM [total addressable market],” Bakish said Tuesday. “Our streaming history has proven that they are additive, ex Q1, so we continue to believe that’s a good strategy.”
Customer gains and advertising in Q1 helped drive direct-to-consumer (DTC) revenue up a whopping 82% year over year to nearly $1.1 billion. That includes $742 million of DTC subscription revenue, up 95% year over year driven by Paramount+, and $347 million in DTC advertising revenue, up 59% year over year driven by Pluto TV.
Direct to consumer Adjusted OBIDA decreased $307 million year over year to a loss of $456 million, which Paramount attributed to investments in streaming including content, marketing and international expansion.
Total Paramount revenue declined by 1% to $7.3 billion.
Financial analysts on the call asked about year over year trends for ARPU of $5.39 including ad and subscription revenue.
Paramount Global CFO Naveen Chopra said that slightly declining trends for year over year average revenue per user (ARPU) was a function of a higher mix of international subscribers versus domestic as Paramount+ launched and gained subscribers globally.
He pointed out that each domestic and international streaming ARPU were up both quarter over quarter and year over year. In the U.S. Paramount saw higher streaming ARPU driven by a lot of domestic Paramount+ subscribers on a free trial in the fourth quarter who were converted to paid subscribers in Q1, according to Chopra, while international subscribers came from markets where ARPU was higher than the installed base where the company had initially launched in some smaller Latin American markets.
“We do think there’s upside potential, it’s a combination of both growth in ad ARPU as well as continued strength on the subscription piece of it,” Chopra said. “Domestic paid ARPU is around $9 dollars and that actually grew in Q1 relative to Q4 as well, so that gives you some sense of the long-term potential when you look at it separately between domestic and international.”